Asian shares inch up, caution over earnings, Fed

TOKYO (Reuters) - Asian shares inched up on Wednesday, cautiously awaiting local corporate earnings reports and the U.S. Federal Reserve's monetary policy decision due later in the session, while taking comfort from improving global economic prospects.

Global stock markets rose on Tuesday as earnings from U.S. companies have generally beaten forecasts so far with the latest upbeat results from Amazon (AMZN.O) boosting the company's stock up 10 percent.

European equities scaled fresh two-year highs on Tuesday as optimism over economic recovery gained momentum after strong U.S. housing market data raised hopes for accelerating demand, while an upgrade in China's economic growth forecast for 2013 by the country's top think tank bolstered risk appetite.

Australian shares .AXJO drifted in narrow range, eking out a 0.2 percent gain after hitting a 21-month high on Tuesday.

South Korean shares .KS11 opened 0.3 percent higher, after staging a sharp rebound on Tuesday from an 8-week low and Japan's Nikkei stock average .N225 opened up 0.4 percent. .T

The Fed ends a two-day policy meeting on Wednesday, and few expect any shift in its current very accommodative stance.

But investors will focus on the statement for any clues to the Fed's thinking on if and when it might pull back from its aggressive easing stimulus. The minutes from the December meeting, released earlier this month, hinted at uneasiness within the Fed around its asset-buying program and sparked a sell-off in Treasuries and lifted yields up out of ranges.

"We see prospect for sustained asset-price reflation in coming months, the result of G3 stimulus efforts and structural reallocation flows," said Morgan Stanley said in a research note.

"This has three implications: Reflation would lend support to higher-yielding emerging markets assets, safe-haven assets would continue to weaken, and expectations about emerging markets policy would likely shift."

The yen remains pressured with the Bank of Japan set to pursue strong monetary easing as the Abe administration pushes for radical reflationary policies to end stubborn deflation.

The dollar steadied at 90.75 yen, still near Monday's 91.32, its highest level since June 2010. The euro also held around 122.46 yen, not far from 122.91 also touched on Monday, its highest point since April.

The euro traded at $1.3489, after scaling a 14-month high of $1.3498 on Tuesday.

U.S. crude oil eased 0.2 percent after rising more than 1 percent on Tuesday on expectations for higher demand.